Monthly Archives: February 2019

Former ministers and senior crown servants must apply for advice from the Advisory Committee on Business Appointments (ACOBA) on the suitability of proposed new business posts. ACOBA makes its advice letters publicly available on its website, if an applicant takes up an appointment. Here I show ACOBA recommended the former chief of defence staff shouldn’t work with a particular tech start-up company – but he was one of two individuals who controlled the firm at the date of the advice letter. The advice letter makes no reference to the fact that he was co-owner. The advice letter is of interest for another reason: it contains a non-trivial error. The ex-chief of defence staff failed to inform ACOBA of the error.

General Sir Nicholas (“Nick”) Houghton was chief of defence staff, the UK’s most senior military officer, from 2013 until 2016. After leaving the Ministry of Defence in January 2017, General Houghton set himself up as an independent consultant through private company De Vinculis Ltd. Crossword Cybersecurity PLC is one of his firm’s clients.

ACOBA’s advice letter about working with Crossword is dated 17 July 2017. There it recommends General Houghton shouldn’t work with ByzGen Limited, a spin-out company from Crossword.

Meanwhile, filings at Companies House show General Houghton was a “person with significant control” (PSC) at Byzgen from 30 June 2017 until 18 September 2017. Therefore, at the date of the advice letter, 17 July 2017, General Houghton was already a PSC at Byzgen, and remained so for a further two months. Yet the advice letter expressly recommends he shouldn’t work with the firm.

When General Houghton was a PSC, there was one other individual PSC, Marcus Ralphs, who is ex-British Army.

The advice letter says nothing about General Houghton being a PSC at Byzgen. I therefore asked ACOBA in an email why its advice letter omits to mention what appears a relevant fact.

Nicola Richardson of the committee secretariat, who wrote the advice letter, replied: “ACOBA’s remit is to provide advice on applications submitted under the government’s business appointment rules. In doing so it considers the risks posed by the individual taking up an appointment or other employment. It is not within the remit of the committee to advise people whether or not they may have shareholdings in a company.”

Her answer fails to address the implications of General Houghton’s PSC status. A reader of the advice letter would reasonably assume General Houghton is independent of Byzgen. But the actual situation is very different: as a PSC, he’s already involved with the firm, by definition. Thus ACOBA’s advice General Houghton shouldn’t work with Byzgen is after the event.

Nevertheless ACOBA makes clear it doesn’t give advice after the event. In August 2018, it refused to give retrospective advice to Boris Johnson about his re-employment by the Daily Telegraph newspaper (see 7 October 2018 post), for example.

Which brings us to the non-trivial error in the advice letter. Its second paragraph states: “ByzGen is in receipt of £81k of funding from the Defence Science and Technology Laboratory (DSTL) at MOD [Ministry of Defence], under the ‘Accelerator’ programme to help develop their proposals for the use of blockchain technology.” However, ByzGen wasn’t the recipient. It’s a matter of public record that DSTL awarded the contract to Crossword (February 2016 competition cycle). (screen shot in Figure 1)

Figure 1. Crossword Cybersecurity PLC is awarded £81k contract by the Defence Science and Technology Laboratory at the Ministry of Defence

I brought the error to the attention of both General Houghton and Mr Ralphs, who is chief executive of ByzGen. Mr Ralphs, replying for both, confirmed it’s an error.

On the error, Ms Richardson wrote in an email: “I can confirm the letter correctly refers to the information provided to the committee by the MOD in July 2017.” She continued: “We note that Companies House records show ByzGen was incorporated on 30 May 2017. However, we are content that this information would not have significantly impacted on the committee’s consideration of the risks in this case. The conditions imposed preclude Lord Houghton from working in or advising on the UK defence market for two years from his last day in post, and the letter specifies that this means he is prevented from ‘working with ByzGen and from advising Crossword or any subsidiaries on working with or securing business or funding from the MOD’.”

I told Ms Richardson I don’t understand why General Houghton didn’t alert ACOBA to the error immediately on receipt of its advice letter. Here the issue is General Houghton’s conduct. The onus is surely on a recipient to bring any errors to the attention of ACOBA straightaway. Why? The advice letters need to be accurate for public trust and confidence in ACOBA and its activities.

Equally, it’s important that the public record is accurate. ACOBA rightly makes its advice letters publicly available – so any errors should surely be corrected. In short, ACOBA has a duty to ensure the accuracy of the public record.

I twice requested a comment from Ms Richardson about General Houghton’s failure to inform ACOBA immediately of the error, but she didn’t comment. The ACOBA staffer didn’t comment on her organisation’s duty to correct errors, either.

At 25 February 2019 there’s no record on the ACOBA website of the error in the advice letter.

When I asked General Houghton in an email (via Mr Ralphs) why he didn’t alert ACOBA to the error immediately on receipt of the advice letter, he gave the following written statement: “I was frustrated by the advice letter because I thought they (ACOBA) might show some flexibility regarding this appointment. I also recognised their advice was based on at least one error of supporting evidence. But, on balance, I had no wish to engage in a protracted exchange. The committee had clearly reached their judgement and I had no wish to present the image of a recalcitrant soldier. Moreover the company (ByzGen) had indicated they were prepared to abide by whatever waiting period ACOBA imposed. So I accepted their advice without further comment.”

General Houghton joined the House of Lords as a crossbencher on 20 November 2017. On 17 January 2019, the former chief of defence staff became a director of Byzgen, according to filings at Companies House. He’s now chair of the firm as well, the register of lords’ interests shows.

There’s no suggestion that General Houghton has done anything illegal.

In September 2018, Roche Products Ltd published online a publicly accessible report, “The NHS at 100”. (nhs100.co.uk) There at the NHS’s 70th anniversary the pharma company surveyed public opinion about how the health service in England might change to ensure it remains effective in 30 years’ time. Prof Tony Young wrote the foreword to the report – in his capacity as National Clinical Lead for Innovation at NHS England.

This tie-up between NHS England and Roche Products Ltd is problematic for at least five reasons.

First, I’m surprised Prof Young attached his name and that of NHS England to a pharma company’s report about the NHS. The report is promotional material for Roche Products Ltd. So why is he and his organisation helping to market the drugs firm?

Third, Roche Products Ltd is currently lobbying the government, according to the latest lobbyist register, for 1 September 2018-30 November 2018, at the Public Relations and Communications Association (PRCA) website. Roche Products Ltd is actually using TWO political lobbying firms, Hanover Communications and MHP Communications. Another reason, therefore, it’s surely inappropriate for Prof Young and his organisation to be working with the drugs firm: it’s lobbying the government.

Fourth, I came across the report when it was mentioned at the end of a newspaper article about broadcaster Cherry Healey and her health. It was in the Daily Mirror on 15 January 2019. (Daily Mirror 15 Jan 2019) The article said Ms Healey is “supporting” Roche Products Ltd’s report. That’s all. However, the pharma company has confirmed to me it’s paying Ms Healey to promote the report. Thus a trusted broadcaster is plugging Roche Products Ltd, without disclosure of interest. Again, I’m surprised Prof Young attached his name and that of NHS England to a firm that misleads the public (newspaper readers) this way.

Fifth, Ms Healey’s Mirror article was problematic for another reason. There she talked about Push Doctor by name, praising it. Push Doctor, meanwhile, has told me it doesn’t have a commercial relationship with the TV presenter. I don’t know whether it’s telling the truth. I hope so. Nevertheless her mentioning the tech start-up company is still problematic because there was simply no need for her to do so, in isolation. She didn’t refer to any of its rivals. Like Roche Products Ltd, Push Doctor, too, is currently lobbying the government, the latest lobbyist register shows. (PLMR is acting for the tech company.) Ms Healey chose, for whatever reason, to highlight Push Doctor while at the same time promoting “The NHS at 100” report. Therefore, the broadcaster linked Prof Young and NHS England’s project with Roche Products Ltd to another commercial company, Push Doctor. So why are he and his organisation helping, if indirectly, to market Push Doctor as well?

Prof Young didn’t respond to requests for comment. Separately, NHS England acknowledged receipt of my request for comment, and asked for the link to the “The NHS at 100” report. Yet the organisation failed to provide a statement.

Quintessentially Foundation (QF), a high-profile grant-making charity that supports other charities only, spent £2.15m in 2017 – but just £1.12m (51.9 per cent) went to other charities. 2017 is the most recent year for which accounts are publicly available. Performance was much better the previous year, however: total spend was £1.95m, of which £1.57m (an impressive 80.2 per cent) reached other charities. Despite the precipitous fall in the proportion going to other charities, QF appears to say in the 2017 trustees’ annual report that the proportion stayed the same between 2016 and 2017.

Business person Ben Elliot is founder and chair of QF (registered charity number: 1144584). On 31 December 2018, environment secretary Michael Gove appointed Mr Elliot as a new “food surplus and waste champion”, an unpaid role, to help drive forward the government’s plans to cut food waste. The government press release refers to Mr Elliot as a “philanthropist” and gushes about his charity. QF has raised £13m to date, says the government (screen shot in Figure 1). Or it’s £12m, according to the charity website (screen shot in Figure 2). What’s a million among friends?

QF is a grant-making charity, making grants to other charities only (not individuals). The 2017 trustees’ annual report, p.2, is clear: “The principal purpose of the charity is to establish a trust fund that provides grants and donations to UK-registered charities as the trustees, in their absolute discretion, shall think fit.”

In 2016, QF donated £1 567 192 (£1.57m) to other charities, while total expenditure was £1 953 476 (£1.95m). So grants made to other charities represent 80.2 per cent of total spend. In 2017, meanwhile, QF donated £1 117 256 (£1.12m) to other charities, while total expenditure was £2 151 345 (£2.15m). So grants made to other charities represent 51.9 per cent of total spend.

The 2017 trustees’ annual report, p.4, para “Financial position”, says: “The charity had a successful year fundraising and are pleased to have maintainied [sic] the percentage of funds donated onto other charities.” (screen shot in Figure 3) That statement appears to be inaccurate, so I asked QF for comment.

Figure 3. 2017 trustees’ annual report: Quintessentially Foundation

The trustees said in an email: “We recognise that the reference to ‘percentage’ in the sentence you cited may not entirely be entirely clear, so we appreciate the opportunity to clarify this for you. Once the charity has raised funds, net of the costs of raising those funds the charity has three options in terms of those net proceeds: 1. Retain the funds; 2. Make grants direct to beneficiaries; and 3. Make donations to suitably vetted charities.” They added: “In both 2016 and 2017 the overwhelming majority of the distributed funds was in favour of other charities. This is what is meant by the reference to maintaining ‘the percentage of funds donated onto other charities’.”

I told QF in an email I thought its clarification was laughable for at least three reasons.

First, the preceding sentence in the 2017 trustees’ annual report to the one I quoted states that of total expenditure in 2017, the charity donated £1 117 256 (£1.12m) to other charities (Figure 3). Thus my interpretation of the quote as proportion of total spend is plausible. As ever, others can make up their own minds.

Second, the public isn’t only interested in what a charity spends on charitable activities. It also wants to know how much of total expenditure goes on charitable activities. The proportion is one indication of how efficient a charity is. This is another reason my interpretation of the quote as proportion of total spend is plausible.

Third, QF is a grant-making charity. As such, then, it’s ridiculous to claim the quote refers to the fact that “in both 2016 and 2017 the overwhelming majority of the distributed funds was in favour of other charities.” That fact is self-evident given the charity’s business model. That’s what it does each year: make grants to other charities!

Only 51.9 per cent (going to other charities) is a disappointing figure that deserves scrutiny. Does QF agree 51.9 per cent is disappointing?

The trustees answered in an email: “Because of the timing of when certain significant fundraising costs were incurred in 2016 and 2017, our efficiency according to your measure was unduly flattered in 2016 while the reverse was true in 2017. There has simply been no growth in inefficiency of our organisation in the past year. Quite the contrary: we believe we continue to outperform the industry.”

Nevertheless the 2016 trustees’ annual report trumpeted the proportion going to other charities, emphasising it had gone up. There QF wrote: “The charity had a successful year fundraising and are pleased to have INCREASED [my emphasis] the percentage of funds donated onto other charities.” (screen shot in Figure 4) Sound familiar? Yes, QF used the same sentence in the 2017 trustees’ annual report, substituting “maintained” for “increased”!

Figure 4. 2016 trustees’ annual report: Quintessentially Foundation

Oh, one last thing. Don’t expect any scrutiny of QF and its claims – or Mr Elliot – in the Daily Mail. Geordie Greig, the newspaper’s editor, has been a trustee of QF since 27 January 2016.

The latest (2017) accounts for charity The Amir Khan Foundation (AKF) show the trustees failed to follow Charity Commission good practice when selecting an independent examiner, the external person who scrutinises a charity’s accounts. Rather than a fully qualified member of one of the accountancy bodies listed by the commission, AKF instead chose someone who, I discovered, is merely a student registered with one of the authorised organisations. Further, what appears to be the independent examiner’s personal Facebook page shows him as a “partner” at a firm with the same name as the Bolton accountancy business in whose name he carried out the independent examination, Adam & Co. However,clicking the Adam & Co link there doesn’t produce a page for the accountancy firm. Rather, it produces a page for an alleged London restaurant also called Adam & Co. The information on that page also invites suspicion.

On 13 November 2018, I exclusively revealed several problems with the then two sets of accounts for AKF, for 2015 and 2016, publicly available at the Charity Commission. At that datethe 2017 accounts were 13 days overdue; the charity previously filed late on both occasions. On 7 December 2018, The Times newspaper reported my investigation (see 7 December 2018 post).

AKF finally submitted its 2017 accounts on 17 December 2018 – 47 days late. The latest accounts show the name and company affiliation of the external person who carried out the independent examination of the accounts. It was “Aziz Hajee (CIMA)” of “Adam & Co Accountants Limited”. Adam & Co is in Bolton, where trustee and eponymous founderAmir Khan, theprofessional boxer, lives. This is the firm’s website: www.adamandco.com(screen shot in Figure 1). (The address on the website is the same as that in the charity accounts.)

Figure 1. Adam & Co Accountants Limited website at 28 December 2018

As you can see,Mr Hajee used the letters “CIMA” after his name in the document. CIMA is the Chartered Institute of Management Accountants. However, searchingCIMA’s database with his surname in the UK produces no results. Similarly, searching withthe company name in the UK doesn’t return any results, either. (I used the “Find a CIMA Accountant” page on the CIMA website.)

In December 2018, I twice emailed Mr Hajee at Adam & Co asking whether he‘s a CIMA accountant or not. I didn’t receive a response.

That Mr Hajee isn’t a CIMA accountant is a concern because Charity Commission good practice requires a fully qualified accountant to carry out an independent examination of so-called accruals accounts (these are accruals accounts). The commission guidance, “Independent examination of charity accounts: Directions and guidance for examiners (CC32)”, is clear on this point: “Trustees who have had the charity’s accounts prepared on an accruals [sic] should select a person who is a member of one of the accountancy bodies listed in the 2011 Act as amended by the 2015 Order.” (Appendix 5: Relevant experience/knowledge and professional qualification requirements).The commission explains what it means by “should” at the front of its document: “‘should’ means guidance that is good practice which the commission expects the independent examiner to follow when carrying out their examination.”

Meanwhile, if a charity’s gross income exceeds £250k, charity law requires the independent examiner to be a fully qualified accountant. AKF income was £213k in 2017.

Then there‘s what appears to be Mr Hajee‘s personal Facebook page (screen shot in Figure 2). There Mr Hajee, if indeed it’s him, identifies himself as a “partner” atAdam & Co – but it isn’t the Bolton accountancy firm. His page links to an alleged London restaurant also called Adam & Co (screen shot in Figure 3).Yet the alleged restaurant bears both the London phone number and website address ofprivate bank Adam & Company! Adam & Company is a brand of The Royal Bank of Scotland PLC (RBS). Until September 2017, the London office of Adam & Company was at22 King Street; London SW1Y 6QY. And that’s the address shownfor the alleged Adam & Co restaurant on the Facebook page, except there the postcode is “SW1Y6” (sic) (Figure 3).

Figure 2. Aziz Hajee’s personal Facebook page at 5 January 2019

Figure 3. Adam & Co “restaurant” Facebook page at 5 January 2019

Like its predecessors, the 2017 accounts omit to mention Penny Appeal (PA), a Muslim international humanitarian charity established in 2009 (see 13 November 2018 post). Yet the AKF website proclaims it works “in partnership” with PA. There‘s one improvement, though: the charity does now at least specify, if partly,where its expenditure on charitable activities has actually gone, identifying some countries where it says itoperates. Yet again there’s no breakdown of spend by country and/or project. The £304.6k spent on charitable activities again simply went on “relief of suffering”. As I asked on 13 November 2018, why so vague?

The relationship between AKF and PA continues to be unacceptably opaque (see 13 November 2018 post). What’s new here is another obvious concern: the failure of the trustees to follow Charity Commission good practice when selecting an independent examiner. Worse, the Facebook page for alleged London restaurant Adam & Co, to which what appears to be “partner” Mr Hajee‘s personal page links, raises serious questions about his credibility, if indeed it’s him.

Michael Spencer, the City financier and former Tory party treasurer, is chair and a director of The Conservative Party Foundation Limited (registered company number: 05289086), an endowment fund set up in March 2009 to support the long-term finances of the political party. In thelatest (2017) accounts, note 10, “related-party transactions”, in the notes to the financial statements, discloses the related-party transaction between The Conservative Party Foundation Limited and Mr Spencer’s firm IPGL Limited (registered company number: 02011009). IPGL made an in-kind donation of £7.12k.

Mr Spencer is chair and a director, as well as majority shareholder, of IPGL (Holdings) Limited (registered company number: 09064598), the entity that owns and controls IPGL Limited. Mr Spencer is also chair and a director of IPGL Limited.

The financial year-end for The Conservative Party Foundation Limited is 31 December, while that for IPGL is 31 March. Thus IPGL filed two sets of accounts – made up to 31 March 2017 and 31 March 2018 – that are contemporaneous with the 2017 accounts for The Conservative Party Foundation Limited.

Both the 2017 and 2018 accounts for IPGL report related-party transactions in the notes to the financial statements: note 22 (2017) and note 20 (2018).

However, neither note 22 (2017) nor note 20 (2018) showsIPGL‘sin-kind donation of £7.12k, or part thereof, to The Conservative Party Foundation Limited. Why?

Mr Spencer didn’t respond to emailed requests for comment. I wrote to him at The Conservative Party Foundation Limited, copying both messages to Ivana Zadro, named contact on the IPGL website “for all enquiries”.